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LTV / CAC Calculator

By Thuong Le · Reviewed

Enter what a customer pays each month, your gross margin, your monthly churn and what you spent to win new customers.

Average revenue per account for one month.

Gross margin on that revenue, as a share.

Share of customers who leave in a month.

Sales and marketing spend to win the new customers below.

Customers won with that spend. Whole numbers only.

LTV:CAC ratio
8.00x
Customer lifetime value (LTV)
$800.00
Customer acquisition cost (CAC)
$100.00
Customer lifetime (months)
20.00
CAC payback (months)
2.50

Compare scenariosSave up to three versions and compare them

Scenario A

Scenario B

Scenario C

How it works

Lifetime value is the gross profit a customer brings before they leave. With a steady monthly churn, the average customer stays 1 ÷ churn months, so LTV is the monthly gross profit divided by churn. CAC is what you spent to win a customer. Put the two side by side and you see whether a customer repays what they cost, and the payback period tells you how many months that takes.

customer lifetime (months) = 1 ÷ monthly churn

LTV = ARPA × gross margin ÷ monthly churn

CAC = sales and marketing spend ÷ new customers

LTV:CAC = LTV ÷ CAC

CAC payback (months) = CAC ÷ (ARPA × gross margin)

Worked example

Example numbers, not benchmarks: each account pays $50.00 a month (ARPA), your gross margin is 80%, 5% of customers leave each month, and you spent $10,000.00 on sales and marketing to win 100 new customers.

  1. 1Customer lifetime100 ÷ 5 (churn as a percent) = 20.00 months
  2. 2LTV$50.00 × 80% ÷ 5% = $800.00
  3. 3CAC$10,000.00 ÷ 100 = $100.00
  4. 4LTV:CAC ratio$800.00 ÷ $100.00 = 8.00x
  5. 5CAC payback$100.00 ÷ $40.00 a month = 2.50 months

What is a good LTV:CAC ratio?

You will see rules of thumb quoted online, but this page gives none: the right level depends on your margins, your stage and how long you can wait to be paid back. A ratio above 1.00x means a customer brings in more gross profit than they cost to win. Track your own ratio over time and compare it with your own earlier periods.

Questions

What is ARPA?

Average revenue per account: the revenue you earn from one customer account in a month. Total monthly revenue divided by the number of accounts is a common way to find it.

How do I find monthly churn?

Divide the customers you lost during the month by the customers you had at the start of it. Enter it as a percent. Churn must be above 0, because a lifetime of 1 ÷ 0 months is not defined.

Which spend goes into CAC?

Use the sales and marketing spend that won the new customers you enter. This calculator uses the figures you type; it does not decide what counts, so use the same rule every period.

What does the model assume?

That ARPA, gross margin and churn stay the same for every customer for their whole life. Real customers differ, so read the result as a rough guide to compare periods, not a forecast.

Why are some results blank?

Each result divides by something. Lifetime, LTV and the ratio need churn above 0. CAC and payback need new customers above 0. The ratio also needs a spend above 0, and payback needs ARPA and margin above 0.

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